Foreclosure Laws & Regulations in Illinois
In Illinois, foreclosure laws are shaped by the lien theory, which states that the property is security for the loan transaction. In this case, the property is held in the borrower's name. This process takes up to 210 days to complete if the foreclosure is not contested by the borrower.
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Judicial Foreclosure
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A judicial foreclosure process mandates that the lender request an order from the court in order to foreclose on the property. The borrower must be given notice of the intent to foreclose a minimum of 30 days before this order is issued. Once the order has been issued, the property must be auctioned to the highest bidder. The sale must be conducted by the sheriff or any judge in the same county the property is located.
Consent to Foreclose
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Consent to foreclose in Illinois is similar to a judicial foreclosure in that a court order is required. However, with a consent foreclosure, the title to the property is simply transferred to the lender. This means that the lender is not required to sell the property at auction; he may keep or dispose of the property in any manner he wishes. This type of foreclosure requires the lender to forgo any deficiency claims on the property.
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In Lieu of Foreclosure
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Illinois provides this process to allow the borrower to simply give the deed to the property to the lender and avoid the entire foreclosure process. This terminates the borrower's interests and debts in the property and precludes the lender from pursuing a deficiency judgment against the borrower.
Deficiency
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When the property is sold at auction, it may sell for less than the balance due on the mortgage. This is referred to as a deficiency. Illinois law allows, in most cases, except for the situations noted above, the lender to have the option to pursue a judgment against the original borrower to recoup the difference.
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